Investors fled to safe havens on Monday morning when markets opened for the first time since Russia's invasion of parts of Ukraine over the weekend, sending emerging markets down sharply as U.S. Treasury bonds and gold rose.
The S&P 500, which on Friday had recorded its 48th record high over the past year, fell 10 points or 0.5 per cent, to 1,849. Canada's S&P/TSX composite index fell just 0.1 per cent, with rising oil and gold producers offsetting weaker parts of the market.
But the bigger moves were overseas, where investors have grown fearful that an escalation in the conflict with Russia could interrupt natural gas exports to the European Union. Europe gets about 22 per cent of its gas from Russia, most of which is transported over pipelines that run through Ukraine.
The U.K.'s FTSE 100 fell 1.5 per cent and Germany's DAX index fell 2.9 per cent in afternoon trading.
But emerging markets, already recoiling from a shift in U.S. monetary policy as the Federal Reserve tapers its monthly bond-buying program, were hit even harder. Russia's Micex index plunged 11.3 per cent, following steep selloffs by Gazprom and Sherbank. Poland's benchmark index fell 4 per cent.
Currencies also turned volatile. The Russian ruble fell to record lows against the U.S. dollar, pushing Russia's central bank to defend the currency by raising interest rates. Countries from Poland to Malaysia also saw their currencies fall, as investors turned to the perceived safety of U.S. bonds and gold.
The yield on the 10-year U.S. Treasury bond fell to 2.623 per cent, while gold rose to $1,348 (U.S.) an ounce, up $21. Crude oil also rose as investors began to price in the prospect of disruptions to energy exports. U.S. benchmark oil, West Texas Intermediate, rose to $104.20 a barrel, up $1.61, touching its highest level since September.
The gains in key commodities helped drive Canadian gold and oil stocks. Suncor Energy Inc. rose 1.3 per cent and Barrick Gold Corp. rose 2.3 per cent in Toronto.